$1.$ Explain the three main legal categories of business organizations and their respective advantages

and disadvantages.

$2.$ Define the following concepts briefly:

Agency Model

Rule of $72$

Effective Annual Rate

Default Premium

Yield Curve

$3.$ Consider the information below from a firm's balance sheet for $2013$ and $2014.$

Current Assets $20142013$ Change

Cash and Equivalents $$1,561$ $$1,800-$$ $239$

Short$-$Term Investments $$1,052$ $$3,010-$$$1,958$

Accounts Receivable $$3,616$ $$3,129$ $ $487$

Inventories $$1,816$ $$1,543$ $ $273$

Other Current Assets $ $707$ $ $601$ $ $106$

Total Current Assets $$8,752$ $$10,083-$$$1,331$

Current Liabilities

Accounts Payable $$5,173$ $$5,111$ $ $62$

Short$-$Term Debt $ $288$ $ $277$ $ $11$

Other Current Liabilities $$1,401$ $$1,098$ $ $303$

Total Current Liabilities $$6,862$ $$6,486$ $ $376$

What is the Net Working Capital for $2014?$ What is it for $2013?$ What is the Change in Net Working

Capital $($NWC$)?$ Assuming the Operating Cash Flows $($OCF$)$ are $$7,155$ and the Net Capital

Spending $($NCS$)$ is $$2,372,$ what is the Cash Flow from Assets?

$4.$ Your company is planning to borrow $$1,000,000$ on a $5-$year, $15\%,$ annual payment, fully

amortized term loan. What fraction of the payment made at the end of the second year will

represent repayment of principal?

BONUS: Joe Hernandez has inherited $$25,000$ and wishes to purchase an annuity that will provide

him with a steady income over the next $12$ years. He has heard that the local savings and loan

association is currently paying $6$ percent compound interest on an annual basis. If he were to

deposit his funds, what year$-$end equal$-$dollar amount $($to the nearest dollar$)$ would he be able to

withdraw annually such that he would have a zero balance after his last withdrawal $12$ years from

now?